The drinking water in the area of last month's coal-sludge spill in eastern Tennessee is safe, but elevated levels of arsenic have been found in the sludge, authorities said.

A billion gallons of the sludge, made up of water and fly ash from a coal-burning Tennessee Valley Authority steam plant in Kingston, Tennessee, swamped 300 acres of mostly private property when a dike on a retention pond collapsed December 22.

All residents in the area were evacuated, and three homes were deemed uninhabitable, according to the TVA. About a dozen other homes were damaged.